Fed Orders Maryland Bank Holding Company to Boost Capital

Regulators are barring a Maryland bank holding company from paying shareholders and some creditors until it takes steps to boost capital.

Patapsco Bancorp, the parent of $254 million-asset Patapsco Bank of Dundalk, has 60 days to detail both the adequacy of the bank's capital and its current and future capital needs, according to an agreement between the company and the Federal Reserve Bank of Richmond entered into Oct. 18 and released Tuesday.

The agreement requires Patapsco to serve as a source of strength to its bank and to detail in writing within two months how it intends to supervise the bank's credit risk management, capital, earnings, asset quality and strategic planning.

Patapsco has to refrain from declaring dividends, redeeming debt or reducing the bank's capital without the Fed's permission. The bank also has 60 days to tell the Fed how it intends to reduce its exposure to commercial real estate credit and improve its assets.

Patapsco's bank unit has lost more than $10 million since the start of 2009, according to the Federal Deposit Insurance Corp. At June 30, its core capital ratio was 7.13%, and its total risk-based capital ratio was 13.26%.

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